TaxTMI 
TaxTMI 
2016 (7) TMI 1240
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....ncome of Rs. 50,70,880/- on 06/09/2012. In the scrutiny assessment, the AO made disallowance of Rs. 1,52,36,988/- u/s. 40(a)(ia) of the Income-tax Act, 1961 (in short 'Act'). 3. The assessee debited interest of Rs. 1,52,36,988/- being the interest paid on time deposits. The AO disallowed the said amount on the ground that such payment is liable to tax deduction u/s. 194A, as no TDS was deducted, in accordance with the provisions of section 40(a)(ia) the interest debited was disallowed. AO also observed that the assessee claimed exemption from TDS u/s. 194A(3)(v). However, this provision is general in nature. There are specific provisions 194A(3)(i) and 194A(3)(viia) which clearly specify that TDS is deductible on interest paid by....
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..../2002, the CIT (A) deleted the disallowance made by the AO by observing as under:- "In view of the above discussion, the interest payments made below Rs. 10,000, the TDS provisions are not applicable. The interest payments made to member shareholders are exempt u/s. 194A(3)(viia). With reference to interest payment to non- members they are again not liable to TDS as the amount was already paid during the FY and the same was not payable as on 31.03.2012 in accordance with decision of Hon'ble Special Bench Vizag in the case of Merilyn Shipping & Transporters of 136 ITD 23 and also in accordance with Hon'ble AP High Court in the case of Janapriya Engineers Syndicate (pronounced on 24.06.2004). Since the entire amount ....
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..... CIT (A) erred in deleting the disallowance of expenditure u/s. 40(a)(ia) of the Act, holding that the amounts are not payable as at the end of the year, ignoring that the provisions are applicable in respect of payments made during the year without TDS being made. 4. The ld. CIT (A) erred in relying upon the decision of Hon'ble ITAT, Special Bench, Visakhapatnam, in the case of Merylin Shipping & Transporting not considering the Circular of CBDT No. 10/DV/2013, [F.No. 279/Misc./M-61/2012-ITJ dated 16/12/2013. 5. The ld. CIT (A) erred in relying upon the decision of Hon'ble ITAT, Special Bench, Visakhapatnam, in the case of Merylin Shipping & Transporting, not considering the fact that said decision is placed unde....
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....lear that the assessee had paid Rs. 64,89,904/- to the depositors, which is less than Rs. 10,000/- limit, which is exempt from TDS provision u/s. 194A(3)(i) of the Act. 10.1 With regard to interest payment of more than Rs. 10,000 to individual members/shareholders, assessee represented before CIT (A) that it is exempt u/s. 194A, whereas the section defines as below:- "1. 194A(3)(v) To such income credited or [paid by a cooperative society (other than a cooperative bank) to a member thereof or to such income credited or paid by a cooperative society] to any other cooperative society. 2. 194A(3)(viia), To such income credited or paid in respect of (a) deposits with a primary agricultural credit ....
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....ble. On careful perusal of the above two representations, we are of the view that if the assessee had collected form 15G, it should be made available to the AO so that it can be verified and exemptions may be granted to the assessee. In the interest of justice, we remit this matter also to the file of the AO to verify the Form 15G and grant exemption. We direct assessee to file the relevant Form 15G before the AO in support of its case. 12. As regards the alternative submissions of the assessee i.e. payment having been already made, there is no outstanding balance as on 31/03/2012 so as to attract TDS provisions and, hence, the assessee cannot be said to be in default, so as to disallow the payment u/s. 40(a)(ia) of the Act. However, it ....